Chase SBA Loans: Everything You Need to Know
If you’re looking for SBA financing, you might find yourself starting with a big-name, national bank—like Chase—especially if you already have a business relationship with this financial institution.
Luckily, not only does Chase issue SBA loans, but they’re one of the top SBA lenders in the country. In 2019 alone, JP Morgan Chase approved 472 SBA 7(a) loans for a total loan volume of $91,328,900.
So, exactly how do Chase SBA loans work? Are these business loans right for your financing needs?
We’re here to help. In this guide, we’ll break down everything you need to know about Chase SBA loans—including what types of SBA loans Chase offers, how to qualify, and why you might decide to work with Chase over another bank or financial institution.
The Ultimate Guide to Chase SBA Loans
Types of Chase SBA Loans
If you’re interested in Chase SBA loans, it’s safe to say that you probably have some idea of what SBA loans are and how they work.
As a reminder, however, SBA loans are loans that are guaranteed by the Small Business Administration and issued by their lending partners—including financial institutions and banks, like Chase.
Generally, the SBA will guarantee up to 85% of the loan amount to incentivize banks to work with small business owners that wouldn’t typically qualify for their products. Therefore, with low rates, long terms, and large loan amounts, SBA loans are one of the most desirable types of business financing on the market.
With this in mind, there are a variety of SBA loan programs—and Chase works with three of them—the 7(a) loan program, the CDC/504 loan program, and the Express loan program.
Here’s what you need to know about each of the types of Chase SBA loans—and how to choose the best option for your business.
Chase SBA 7(a) Loans
The SBA 7(a) loan program is the most common and popular SBA loan program.
These Chase SBA loans are best for borrowers looking to make a major business expansion, purchase an existing business, manage cash flow, or purchase equipment.
Loan amounts: SBA 7(a) loans from Chase are available in amounts up to $5 million.
Terms: The terms of these Chase SBA loans will vary based on how you plan to use the funds. If you’re using the 7(a) loan for working capital or cash flow needs, the term length will be seven years. If you’re purchasing equipment with a Chase SBA 7(a) loan, your term will likely be 10 years. Finally, if you’re financing a commercial real estate purchase, then your term will be 25 years.
Rates: Chase SBA 7(a) loans have both fixed and variable interest rates. If you receive a fixed rate, you’ll have the same interest rate throughout the maturity of the loan’s term. A variable interest rate will vary as the national prime rate changes. This being said, Chase doesn’t set specific rules on what they charge for SBA 7(a) loans—so your rate will likely depend on your qualifications. However, the SBA does impose a maximum on these loans—meaning at the most, your SBA loan rate with Chase will be the prime rate + 4.75%. Generally, you should find that your Chase SBA 7(a) loan rate isn’t more than 10%.
Chase SBA CDC/504 Loans
In addition to 7(a) loans, Chase also issues SBA CDC/504 loans.
Unlike 7(a) loans, CDC/504 loans are designed specifically for the purchase of major fixed assets—including real estate, land, large pieces of equipment, etc.
Additionally, whereas SBA 7(a) loans are issued by lending partners, CDC/504 loans are more complex. These SBA loans are divided into three pieces—one piece from the bank, one from a community development company (CDC), and the final piece from the borrower. Chase, therefore, provides the bank portion of this type of SBA loan and works with the CDC to issue the loan.
Overall, these Chase SBA loans are best for business owners who need financing to purchase fixed assets, whether they’re looking to expand their business by purchasing land, construct on current commercial real estate, purchase an existing business, or finance equipment.
Loan amounts: Because these loans are used to finance purchases of fixed assets, there’s no maximum loan amount—however, according to Chase’s website, the maximum loan amount they offer is up to $12.5 million for these SBA loans. Additionally, they specify that you can borrow up to 90% of the project cost or collateral value—although the amount you ultimately receive will vary based on your qualifications.
Terms: Generally, if you’re using a CDC/504 loan specifically to purchase machinery or equipment, you’ll receive a term of 10 years. On the other hand, if you’re using a 504 loan to purchase real estate or build on land, your terms will typically be 20 or 25 years. This being said, however, Chase writes that “extended terms are available,” on their website.
Rates: Once again, Chase doesn’t set definitive rules for their rates on these loans, however, they will be subject to the SBA guidelines. You can expect these rates to mirror the interest rates you’d see with other types of commercial real estate loans.
Chase SBA Express Loans
Finally, the last type of SBA loan offered by Chase is the SBA Express loan.
Part of the larger 7(a) loan program, SBA Express loans are offered by traditional SBA lenders, but approved over an expedited time frame. Whereas typical SBA loans could take weeks or months to close, the SBA Express program has a 36-hour turnaround time.
This being said, these Chase SBA loans are not only great options for borrowers looking for fast financing, but also for those who need funding for smaller real estate purchases, working capital, business acquisition, or equipment purchases.
Loan amounts: Chase offers SBA Express loans as both term loans and lines of credit. This being said, however, they offer either of these in amounts up to $350,000. With the structure of these term loans, the SBA only provides a maximum guarantee of 50%. However, Chase will let the borrower finance the SBA guarantee fee with the loan itself. With their lines of credit, Chase offers revolving lines of credit—meaning once you pay back what you’ve borrowed, your credit line will be refilled to the original amount.
Terms: SBA Express loans from Chase can have variable terms, however, for lines of credit, the maximum term (per SBA guidelines) will be seven years. For a term Express loan, you can expect 25 years for real estate purchases and five to 10 years otherwise.
Rates: These Chase SBA loans can have fixed or variable interest rates. Once again, Chase will decide your rate based on your qualifications, but the rate cannot exceed the SBA’s maximum—meaning your rate will fall within this range—Market Prime Rate + 4.5% to 6.5%.
The Advantages of Chase SBA Loans
As you can see, Chase offers some of the most popular SBA loan programs—and therefore, can meet the financing needs of a variety of different businesses.
This being said, however, there are hundreds of SBA lenders around the country: Why work with Chase?
Here are two notable reasons why Chase is worth considering as your SBA lender.
Preferred SBA Lender
First and foremost, Chase is a preferred SBA lender.
In essence, this means that they have significant experience processing and servicing SBA loans—which generally means a shorter time to fund in comparison to other SBA lenders.
As we briefly mentioned above, the numbers speak for themselves: In 2019 alone, Chase approved 472 7(a) loans for a total loan amount of $91,328,900. With these numbers, at the end of 2019, Chase was the seventh-most active SBA 7(a) lender in the country.
In this way, because Chase has such experience with SBA loan applications, they’re better qualified to underwrite and approve your SBA loan efficiently.
Another specific reason to work with Chase for SBA loans, over Wells Fargo, for instance, is that Chase is friendlier to younger businesses.
Almost all SBA lenders will require that small business applying have been in business for at least two years.
Chase SBA loans, on the other hand, are available to businesses regardless of their time in business.
Therefore, if you’re a startup owner with strong financials and a great credit score, you still could qualify for an SBA loan from Chase. If you were to pursue another lender, however, you might not have the same opportunity.
How to Qualify for an SBA Loan From Chase
So, if you think Chase SBA loans are the right solution to meet your needs, the next step is determining how to qualify for one of these loans.
This being said, although SBA loan from Chase can be easier to qualify for than other Chase business loans, you’ll still need to meet top requirements to qualify.
Plus, because these Chase loans (in fact, any SBA loans) have such an extensive loan application, you’ll want to evaluate your eligibility before submitting an application.
Therefore, you’ll want to consider whether or not your business can meet both Chase and SBA standards before you start applying for a loan.
Chase Requirements for SBA Loans
Overall, Chase will be looking closely at your business’s financial numbers to see if you qualify.
As we mentioned, Chase is unique in that they’ll work with new business owners. Most lenders, on the other hand, find newer businesses to be too risky—as there’s less reassurance that the business will succeed in the future.
However, if you’re a younger business, Chase will consider your personal financial situation more closely to see if you’ve been reliable with your debts in the past, and determine whether you have enough assets to cover the cost of your SBA loan.
Therefore, with a heavy emphasis on the amount and health of your liquid assets, your viability as a borrower with Chase depends on the following:
- Your business’s financial history
- Your personal and business credit score
- Your net worth
- Your current debt-to-income ratio
- Your fixed and liquid assets
SBA Loan Requirements
In addition to meeting the SBA loan requirements from Chase, you’ll also have to meet specific qualifications from the SBA in order to be approved for one of these loans.
This being said, at a minimum you must:
- Be a for-profit business
- Do business in the U.S. in an eligible industry
- Meet the SBA’s definition of a small business
- Have invested your own time and money in your small business
- Have exhausted other financing options
- Show that you have “good character”
- Show your ability to repay and that you have a sound business purpose
- Not be delinquent on other government loans
Alternatives to Chase SBA Loans
Of course, as we’ve mentioned, Chase isn’t the only lender that offers SBA loans.
Some of the top SBA lenders are both big, national banks and small, regional banks.
Therefore, if you’re not currently a Chase customer, it’s always worth considering some of the best alternatives to Chase SBA loans.
Along these lines, you might start with a bank (whether local or national) that you already do business with—this might be the bank that houses your business bank account, the one that issued your business credit card, or one that has provided your business financing in the past.
This being said, in addition to Chase, many of the most well-known banks—Wells Fargo, Bank of America, and more—also issue SBA loans.
On the other hand, you might also look into the lenders that, like Chase, are the most active SBA lenders in the U.S. In 2019, the top five most active SBA 7(a) lenders were:
- Live Oak Banking Company; 250 loans approved; total approved amount: $347,271,200
- Newtek Small Business Finance, Inc.; 253 loans approved; total approved amount: $$205,579,500
- Wells Fargo; 692 loans approved; total approved amount: $144,769,600
- Byline Bank; 108 loans approved; total approved amount: $126,171,900
- Huntington National Bank; 762 loans approved; total approved amount:$124,924,100
Frequently Asked Questions
The Bottom Line
At the end of the day, if you think that either the 7(a) loan, 504 loan, or SBA Express loan is right for your business’s financing needs, there’s no doubt that Chase is worth considering as your small business lender.
This being said, however, before you visit a Chase branch to start your application, you’ll want to determine whether or not you’re likely to qualify for one of these loans. As we’ve discussed, although SBA loans are one of the most desirable forms of funding on the market, they’re also not the easiest to qualify for—plus, they require a lengthy and time-consuming application process.
Additionally, if you think you can qualify for an SBA loan, you should also consider whether a different lender is better-suited for your business. As we mentioned, Chase is a particularly noteworthy option for startups—however, if you have a few years in business, you might find that another preferred lender, like a bank you already work with, can also provide SBA loans.
All in all, it’s up to you to decide what’s best for your business in order to access the financing you need.